Diabolical pension inheritance tax on death 2027.

DRS1 · 7 May at 9:46PM

https://forums.moneysavingexpert.com/discussion/comment/81990652#Comment_81990652

I seem to recall a life insurance policy called Decreasing Term Assurance (or something like that) which could be taken out to cover the IHT on failed PETs. This was a very long time ago so I don't know if it is still something people do.

poseidon1 · 7 May at 11:06PM

https://forums.moneysavingexpert.com/discussion/comment/81990693#Comment_81990693

You are correct such policies have been around for as long as the PET regime has been on the statute books. They are still 'alive' and well and should be considered as part of the estate planning when large gifts are in point - see below -

https://adviser.royallondon.com/technical-central/protection-guidance/inheritance-tax-and-related-manuals/gift-inter-vivos/

Bostonerimus1 · 7 May at 11:55PM

https://forums.moneysavingexpert.com/discussion/comment/81990778#Comment_81990778

Very interesting. Do you have any idea of the cost for say an initial 100k of insurance for a 70 year old man. I assume that the cost goes up with increasing age.

poseidon1 · 8 May at 11:27AM

https://forums.moneysavingexpert.com/discussion/comment/81990812#Comment_81990812

Sorry no idea, its been well over 14 years since I was last personally involved in organising theses.

However, you might be able to get an indication via a quick online quote from the following company

https://www.futureproofinsurance.co.uk/gift-inter-vivos-insurance/

Albermarle · 8 May at 12:58PM

https://forums.moneysavingexpert.com/discussion/comment/81990652#Comment_81990652

Thanks for the clarity on the legal position.

It has been mentioned in previous posts, that in practice the estate usually pays these bills, rather than the gift recipient. ( although it is not obliged to). So I was only repeating that really, maybe it is just heresay?

poseidon1 · 8 May at 1:59PM

https://forums.moneysavingexpert.com/discussion/comment/81991281#Comment_81991281

Where the failed PET recipients and residuary beneficiaries are one and same there is probably no difference who pays the IHT.

However one can easily see how a beneficiary given a substantial pre death gift ( which absorbes the NRB) and then receives an equal portion of the remaining post tax residuary estate obtains a significant and perhaps unfair advantage over other beneficiaries .

I also wonder to what extent DIY executors ( and indeed testators) are unaware of the correct legal position with regard to failed PETs and voluntarily pay the IHT from the estate without thought or professional advice. On the probate forum there does appear to be persistent misconceptions surrounding the tax outcomes of failed PETs, taper relief and upon whom an IHT liabilty falls in the first instance.

Marcon · 8 May at 2:42PM

It has been mentioned in previous posts, that in practice the estate usually pays these bills, rather than the gift recipient. ( although it is not obliged to). So I was only repeating that really, maybe it is just heresay?

What an honest post! Unfortunately that's exactly how misunderstandings and misconceptions flourish. Some answers on this board are spot on, but often the posters are well meaning rather than well informed - never hard where anything relating to tax (and pensions) is concerned.

I also wonder to what extent DIY executors ( and indeed testators) are unaware of the correct legal position with regard to failed PETs and voluntarily pay the IHT from the estate without thought or professional advice.

Given the alacrity with which incorrect answers routinely appear on the probate forum, I don't think it takes too many brain cells to work out the answer, especially given that so many of the answers repeatedly assure posters that DIY is no problem, lawyers slow things down and cost far too much and 'they can always ask here if they get stuck'. There's an assumption, especially from new users, that those answering know what they're talking about. Sometimes that's true, but all too often the answers are of the 'google and guess' variety. Few professionals would hazard replies where the information given in an opening post is both sparse and (ahem) one-sided.